This is a war of cities, as well as the result of a competitive struggle between the two leading new energy automotive companies, Tesla and BYD.
In terms of new energy vehicle production, Shenzhen became China’s “Number One New Energy Vehicle City” in 2023. This is a surprising yet reasonable answer. To outsiders, with the leading company BYD and a complete supply chain, Shenzhen should have taken the lead much earlier. However, it wasn’t until 2023 that Shenzhen broke through the competition, with other cities leading in the previous three years. In 2021, Shanghai won the crown; in 2022, Xi’an was the dark horse that rose to prominence.
This is not only the result of the three-year competition between Tesla and BYD, two major enterprises, but also thanks to the vigorous promotion by the local government. Shenzhen’s huge growth momentum is reflected in the doubling of production each year. In 2021, Shanghai took the lead with a production of 632,000 new energy vehicles, while Shenzhen and Xi’an produced 299,500 and 269,000 units respectively. By 2022, Xi’an’s production surged to 1,015,500 units, surpassing both Shanghai and Shenzhen. However, in 2023, Shenzhen achieved an amazing growth rate of 104.2%, with a base of 874,700 units from the previous year, the annual production is expected to reach 1,781,200 units, far exceeding Xi’an and Shanghai.
Official data shows that Shenzhen’s new energy vehicle production had already reached 1,235,000 units in the first three quarters of 2023, and the year-on-year growth reached 125.8%, significantly higher than Shanghai’s 914,700 units and Shaanxi Province’s 723,000 units at the same time. Looking at the overall trend, although Xi’an, Shanghai, and Shenzhen have taken turns leading in production, all three cities have shown a pattern of waxing and waning growth.
Further data indicates that in the national new energy vehicle industry, Shenzhen, Shanghai, and Xi’an have always been prominent for the “head effect,” with their national shares of new energy vehicles in 2021 being 8.15%, 17.19%, and 7.32% respectively. By 2023, Shenzhen’s share soared to 18.86%, while Shanghai and Xi’an accounted for 13.66% and 10.42% respectively. These three cities consistently maintained a combined share of over 30% in the domestic new energy vehicle production.
Regarding the growth rate of production, Shenzhen may not be as eye-catching as Xi’an and Shanghai, but from 2019 to 2023, the annual growth rate of production has always been above 100%. Compared to 174% in 2021, the rate recorded for 2023 is 104%, although there has been a decrease, the difference is not significant. In contrast, Xi’an showed a significant decline in the annual new energy vehicle production in 2023, with only a 26% growth rate, due to the extremely high growth rates of 348% and 278% in the previous two years.
Despite some statistics indicating that Xi’an’s new energy vehicle production in 2023 amounted to only 983,800 units, slightly less than the previous year’s 1,015,500 units, this may be due to inconsistencies in statistical caliber.
According to the latest data released by the Xi’an Bureau of Statistics, in 2023 the city saw a 26% increase in the production of new energy vehicles compared to the previous year. The situation in Shanghai was slightly different; in 2022, the annual growth rate of new energy vehicles was only 57%, a significant slowdown from the 160% growth rate in 2021. Entering 2023, the growth rate of new energy vehicle production in Shanghai has stabilized at 35%, showing a relatively smooth transition.
It is noteworthy that over these three years, Tesla and BYD, two major automobile manufacturers, have sparked intense competition across three major cities. Tesla regards Shanghai as its important base in China and has seen significant boosts to the new energy automobile industry there since the Shanghai factory commenced operations in 2018 and delivered its first products by the end of 2019. Tesla’s global production soared to over 930,000 vehicles in 2021, securing its position as the leader in new energy vehicle production. Against this backdrop, Shanghai’s new energy vehicle production also surged by 160%, making it the highest-producing city for new energy vehicles worldwide that year.
Furthermore, “Finance” magazine’s survey found that in 2023, a total of 947,000 new energy vehicles were produced at Tesla’s Shanghai Gigafactory, accounting for over 70% of Shanghai’s total production. Globally, Tesla’s production is expected to reach 1.85 million vehicles in 2023, with the Shanghai Gigafactory contributing about half of that number. Currently, Tesla has six major Gigafactories worldwide, and the Shanghai factory not only supplies vehicles for the Chinese market but also exports to the Asia-Pacific, Australia, Europe, North America, and more, further strengthening Shanghai’s position in the international new energy vehicle market. In 2023, exported electric passenger vehicles from Shanghai reached 565,000 units, valued at 120.89 billion yuan, up 43.9% year-on-year. Among these, 359,000 units were exported to Europe, an increase of 22.6%, representing 63.5% of the total export volume; exports to Australia were 58,000 units, up 94.5%; and exports to the ASEAN region were 38,000 units, achieving an astonishing increase of 349.9%.
Meanwhile, BYD has had a profound impact on the cities of Shenzhen and Xi’an where it operates. 2022 was a bountiful year for BYD—its annual new energy vehicle sales exceeded Tesla’s for the first time, and it achieved the honors of being the “first Chinese brand to sell one million new energy vehicles in a year” and the “first company globally to produce 3 million new energy vehicles.” In 2022, BYD’s new energy vehicle production exceeded 1.877 million units, a 209.17% increase from the 607,100 units in 2021, surpassing Tesla’s global production that year and amounting to 2.5 times the output of Tesla’s Shanghai factory. This allowed Xi’an to become an important production base for new energy vehicles.
It is worth mentioning that BYD has a long-standing partnership with Xi’an: in 2003, BYD established a factory in the Xi’an High-tech Zone after acquiring the Xi’an Qinchuan Automobile Company; in 2017, it established a production base for pure electric buses in the Xi’an New Energy Plant Area; in 2018, it initiated the second phase of the expansion project for an annual production of 300,000 new energy passenger cars; and in 2019, BYD’s high-end smart terminal industrial park was also launched in Xi’an, further consolidating its leading position in the industry.
BYD’s contribution to Xi’an’s new energy industry is crucial. As of 2022, BYD’s Xi’an factory independently completed the production of about 995,000 vehicles, a remarkable number that covered nearly all of Xi’an’s new energy vehicle output for the same period. It was this impressive production volume that honored Xi’an with the title of “Number One City for New Energy” for that year.
The subsequent year, 2023, continued to be a highlight for BYD, with production and sales volumes surging further, establishing a leading position in competition with Tesla and earning the title of annual sales champion. However, with this prestigious status change, Xi’an’s unique superiority in the industry was also diminished.
The construction and operation of new factories, such as BYD factories in Changzhou, Fuzhou, and Hefei, began to divert some of the best-selling vehicle capacity from Xi’an. That year, the city of Shenzhen took over the relay baton in this industrial competition. Thanks to the expansion and reconstruction of BYD in the Shenshan Cooperation Zone and its Pingshan headquarters, Shenzhen’s new energy vehicle output achieved a new leap. It is reported that the construction project of Shenshan BYD Automotive Industry Park has a total investment of an astonishing 25 billion yuan, and the expected annual output value will exceed 110 billion yuan when it reaches full production, providing more than 54,000 job opportunities for related industries. At this moment, the first phase of the industrial park has successfully launched six production lines.
Experts point out that Shenzhen’s significant increase in new energy vehicle production in 2023 is due to BYD’s huge contribution. On the one hand, the operation of Shenshan BYD has noticeably increased Shenzhen’s overall automotive production capacity, with an expected capacity of 600,000 vehicles per year. On the other hand, BYD’s sales momentum in the Southeast Asian market is strong, with most of the exported models produced in Shenzhen.
These development events are just a small part of the macroscopic picture of China’s new energy automotive industry. The General Office of the State Council issued the “New Energy Vehicle Industry Development Plan (2021-2035)” in 2020, with a goal to have new energy vehicle sales account for about 20% of total vehicle sales by 2025. The government has been vigorously promoting the growth of the new energy vehicle industry through measures such as infrastructure construction and financial subsidies. Under this stimulus, China’s new energy vehicle annual output increased from 3.677 million units in 2021 to 9.443 million units in 2023.
According to data from the National Bureau of Statistics, in 2023, China’s new energy vehicle production and sales volume increased by 30.3% year-on-year and held a leading position globally. And in this year, the competition for the title of the city of new energy marked a phased conclusion, yet the competition among many cities has only just begun.
Specifically, the 2023 Xi’an municipal government work report highlighted the need to significantly enhance pillar industries, with a particular focus on developing the new energy vehicle industry. To replenish the supply chain, Xi’an invested in the construction of a new energy electronics industry base, covering 110,000 square meters in Huyi District. This base aims to become a research and development center for automotive power electronic products, and core facilities for the manufacturing of electronic telecom devices, instrumentation production, precision machinery processing, and new materials supply chain services. It will also serve various aspects such as new energy vehicle electronic components, vehicle interiors, and the automotive aftermarket.
Facing the risk of industrial monoculture, the Xi’an government deeply realized its excessive dependence on the singular enterprise BYD, and also saw the tremendous potential for cooperation with other provinces. In 2023, the Shaanxi Provincial Department of Industry and Information Technology led the formation of a dedicated team for investment attraction, delving into economically developed areas such as Guangdong, Zhejiang, Jiangsu, and Shanghai. The targeted investment attraction actions were carried out 16 times, resulting not only in the successful establishment of over 10 projects but also in ongoing negotiations for more than 20 projects, with the estimated total investment exceeding 50 billion RMB.
Shenzhen is actively advancing its blueprint to become the new generation of advanced automobile city with global influence. According to Shenzhen’s three-year action plan, by 2025, the city’s annual production capacity for new energy vehicles is expected to exceed 2 million units, significantly increasing the “Shenzhen content” in the global automotive industry. The output value of the automobile industry is expected to reach the trillion RMB level. At the same time, Shenzhen plans to increase the number of new energy vehicles to 1.3 million units, with a market penetration rate expected to reach 70%, striving to maintain a leading position in the domestic market. Moreover, the construction of 600,000 charging piles and 300 supercharging stations is also part of the plan.
Meanwhile, Shanghai is also sparing no effort to increase its influence in the new energy vehicle industry chain. Through collaborative cooperation with the Yangtze River Delta region, it promotes the overall development of the industry chain. In February 2021, Shanghai issued a detailed plan to advance the development of the new energy vehicle industry, now boasting over 42,400 related companies, covering 4% of the country’s new energy vehicle companies. Liu Bin, the deputy director of the Shanghai Municipal Transportation Commission, noted that, according to the city government’s new round of infrastructure construction action plans, the future will continue to see significant advances in support services for intelligent vehicles, smart transportation, and intelligent energy facility networks.
In addition to Shenzhen and Shanghai, major cities across the country are actively laying out plans for the new energy vehicle industry. For example, Chongqing is partnering with Huawei to create the Seres brand; Liuzhou is famous for the Wuling Hongguang; and Hefei is the home base of NIO. Without exception, these cities are all doing everything they can for the development of the industry in the new year.
